I think the budget will give some clearer indication of where we're heading

But the report, completed by a three-member team headed by former federal treasurer Peter Costello, expressed the corresponding figure as a comparison with population growth not a statement on affordability.

Queensland Treasurer Tim Nicholls. Photo: Harrison Saragossi

“If the size of the public sector in Queensland had remained at the same percentage of the population as in 2000, in 2010-11 employee numbers would have been around 18,500 lower and expenses around $1.5 billion lower (all other things being equal),” the government-commissioned report stated.

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Mr Nicholls said the report showed the public service had grown too large as a share of population.

“So 18,500 gives us roughly that 20,000 number that the Premier and myself have been talking about, around 20,000 more than is reasonable given the size of our population and that's the number we have been using,” he said during the extended interview, recorded on Friday.

The audit report shows the major increase in the size of the public service, as a share of population, has occurred in Queensland Health.

Premier Campbell Newman has repeatedly told Parliament and the media that the state had employed “20,000 more public servants than the people of Queensland can currently afford”.

Asked why the government kept referring to “afford” when the commission of audit expressed the figure as a simple comparison with population growth rates, Mr Nicholls said the state had been incurring budget deficits.

“Quite clearly when you're running deficits and have been running deficits for the last four or five years and debt continues to increase, the money is being used to pay for the increase in expenditure,” Mr Nicholls said.

“The commission of audit also indicates the size of the public service has increased by 41 per cent over the last decade, most of that increase has occurred over the last five years, and the expenses of government have gone up by over 10 per cent whilst our revenues have only increased by 6.5 per cent.”

Mr Nicholls added: “If we had had population growth and the size of the public service growing in line then the savings would mean that we would be able to continue to afford a public service at that size, so we don't have the right size public service for the size of Queensland.”

Pressed on why 2000 was the year when the state's public service was deemed to be the right size as a share of population, Mr Nicholls said: “Well I think if you go back over time you look at those sorts of numbers and you have to start somewhere. We can't go back to 1900.”

Mr Nicholls said the commission of audit had independently assessed the issue and taken a decade-long look at trends.

The audit report found that almost half of the increase in employee numbers since 2000-01 (about 28,600 employees) was attributable to health, with the next largest contributor being education (an increase of around 13,900).

The report noted that “except for health, the increases in all other functions relative to the year 2000 are broadly in line with population growth”.

But Mr Nicholls maintained that adjustments to staff numbers were required in other government departments, not just in health. Health Minister Lawrence Springborg has so far refused to dispute claims some 4000 to 6000 jobs could be cut from his department.

“I think that we have seen growth in health,” Mr Nicholls said.

“The commission of audit also goes on to say that despite an over 30 per cent increase in expenditure on health we haven't seen the benefit of that 30 per cent increase. People will remember before the election the very many criticisms about the size of the health bureaucracy.”

The audit report stated the Queensland public sector was similar to the size of Western Australia's as a share of population (both 4.5 per cent) but higher than the public service of New South Wales (3.9 per cent) and Victoria (3.8 per cent).

The debate over the size of the public service comes in the lead up to the delivery of the Newman government's first budget on September 11, when up to 20,000 job cuts are expected to be confirmed.

A government spokesman said the number of full-time-equivalent public servant positions had decreased from 204,199 in early April (a short time after the election) to 199,652 at the end of July – a drop of about 4500.

Mr Nicholls, who previously promised no forced redundancies, defended pursuing a much more active process than the use of natural attrition to manage the size of the public service that was flagged during the election campaign.

He said when the election commitments were put together, natural attrition “would have gone to meeting that requirement but now the task is much bigger because we find out the problem is much worse”.

“Because of those changes, we're now not in a position to rely on natural attrition; we now have to go through both the voluntary redundancy program and the redundancy program.”

Mr Nicholls said the audit report's findings meant “we've had to take more drastic measures than we would have otherwise hoped to have done”.

Asked whether he was following former premier Anna Bligh in retreating from election pledges on the basis of a worse-than-expected financial position, Mr Nicholls said: “I think what people will see is a new government determined to get Queensland back on track.”

The Labor opposition and unions have accused the government of exaggerating Queensland's financial woes to justify cuts to the public sector and state-funded services.

But the government argues the audit report shows tough measures are required to turn around the state's finances.

Mr Nicholls has flagged a savings and fiscal consolidation target of $4 billion over three years.

Mr Nicholls said he wanted to reduce the reliance on debt to fund infrastructure projects and return to a “reasonable mix of debt and funding from our own sources”.

He dismissed the suggestions the budget task would not be as difficult if the LNP had not incurred $4 billion in promises over four years in the lead up to the election.

He argued the claim the LNP had racked up unfunded election commitments was a “myth”.

Mr Nicholls said funding sources had been identified before the election but the incoming brief he received from the Treasury after being sworn in indicated the state's finances were “unsustainable” and required immediate action.

He refused to release the entire incoming Treasury brief to back up his claims, saying it contained information confidential to government.

“Much as you might like to see it, for very good reasons that's not there, but I have indicated very strongly the incoming advice in that first paragraph.”

Mr Nicholls said the commission of audit report and a recent Moody's investors report confirmed the state was spending more than it was earning.

Previous budget predictions of revenue were disputed and some of the health payroll repair costs had not been funded, he said.

Gross debt currently is about $65 billion. A government document released last month indicated the LNP would still head towards a debt of $85 billion in 2014-15, the same level in the same year flagged by Labor.

83 comments

Tim Nicholls cannot explain why the Newman LNP government is dragging it's feet on increasing the mining royalties and taxes on gambling. 6 months on and they still haven't put it in to legislation, thats 6 months worth of money that has gone into wrong pockets..... That's 6 months worth of money that could have been paying off the supposed debt....

Commenter

John

Location

Inala

Date and time

August 20, 2012, 12:52PM

The truth is there is no "debt". There are borrowings but no net debt. According to Queensland Treasury's own figures (http://www.qtc.qld.gov.au/qtc/wcm/connect/1ac2d9004fee846892ccfb140bc6de40/Investor+booklet+31March12.pdf?MOD=AJPERES&CACHEID=1ac2d9004fee846892ccfb140bc6de40) the state has $79 billion in borrowings but $118.2 billion in financial assets.

Look at it like a household budget. If you had a $79,000 loan but $118,200 cash in the bank, you would not be "in debt".

Commenter

Meanwhile

Location

in the real world

Date and time

August 20, 2012, 2:08PM

Because these people are only interested in making most people suffer while them and their mates are doing fine. I highly doubt that mining royalties will be raised. It's a distraction from what they are really doing. I do think they will raise payroll tax on small to medium businesses. So far this government has been completely predictable.

Commenter

John Michaels

Location

Offshore

Date and time

August 20, 2012, 2:21PM

@Meanwhile - You thinks that assets equates to "cash". based on your notion, everyone with a mortgage has no debt!

Commenter

Peter@Brisneyland

Date and time

August 20, 2012, 2:25PM

well, at lest he hasn't blamed the carbon tax. no wait ...

Commenter

pig-cat-eons

Location

sunny coast

Date and time

August 20, 2012, 3:14PM

There was NO crisis.

But there's porky pies from the Treasurer.

If the "incoming brief he received from the Treasury after being sworn in indicated the state's finances were 'unsustainable” and required immediate action', then why did the 30 June 2012 Treasury report say otherwise?

Yet as he points out, the LNP is pursuing the very policies that will make an economic crisis.

Campbell Newman has also referred to a more recent assessment by Moody's, but even that one does not paint the catastrophic picture he claims. Apart from anything else, even if Qld Govt finances were cactus (they're not, but watch out if the LNP keeps pointing the Qld economy in a nose-dive), the Feds can bail us out. Just like the US Govt bailed out Florida a few years ago. But that misses the point. Qld Govt finances are in great shape. Just ask Treasury.

Or the Gold Coast Turf Club with its 110 million smacker-oonies.

Come and join the protest against your own government on Thursday, Mr Nicholls.

You don't really have any reason for defending the cuts, do you?

Commenter

There was no crisis

Date and time

August 20, 2012, 3:18PM

Peter @ Brisneyland, Meanwhile was talking about Net Debt. For the householder with a mortgage hopefully the net debt is positive when the value of the house is considered. The thing is that all these statistics have a degree of assumption about them. The amount of the borrowings (gross debt) is always easy to see and identify but the asset value side, especially in Governement assets and infrastructure has all sorts of assumptions attached in order to come up with the value as they will rarely if ever be sold. In this respect it is similar to the householder when they sell they have to accept what the market will pay at that time.

All Polititians and Governments do what the LNP are doing but rarely do they have such a majority that gives them unfettered power so they can play the numbers however they like, and they are, while playing us the general public as fools. I guarantee if the majority had been less than 20, and the books were in the same place, they would be taking a more considered approach but in this case they know they can do almost anything and not get voted out next time.

Commenter

Pancho

Date and time

August 20, 2012, 3:19PM

Peter@Brisneyland - Financial assets don't equate to debt. Your inference is wrong and not based on what @meanwhile's argument. The concern with the debt is that it needs to be productive. Debt to maintain infrastructure, and add more is constructive. Like a business going into debt to buy machinery and premises to increase growth.

Commenter

Peter of Brisbane

Date and time

August 20, 2012, 3:21PM

Like your points Pancho, especially the second para.Be interesting to see the amount of stress/sick leave being taken at the moment. Being called the Newman flu I believe.

Commenter

Newman flu

Location

Aspley

Date and time

August 20, 2012, 5:46PM

A discredited Treasure quoting from a dodgy report by a Political crony. Its about time the media held these people to account. You championed their cause before the election and as such you are equally responsible for their lies and deception.